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City Council - 09/07/2010 APPROVED MINUTES EDEN PRAIRIE CITY COUNCIL MEETING TUESDAY, SEPTEMBER 7, 2010 7:00 PM, CITY CENTER Council Chamber 8080 Mitchell Road CITY COUNCIL: Mayor Phil Young, Council Members Brad Aho, Ron Case, Jon Duckstad and Kathy Nelson CITY STAFF: City Manager Scott Neal, Parks & Recreation Director Jay Lotthammer, Public Works Director Gene Dietz, Community Development Director Janet Jeremiah, City Attorney Rick Rosow and Council Recorder Jan Curielli I. ROLL CALL/CALL THE MEETING TO ORDER Mayor Young called the meeting to order at 7:00 PM. All Council Members were present. II. COLOR GUARD/PLEDGE OF ALLEGIANCE III. OPEN PODIUM INVITATION IV. PROCLAMATIONS /PRESENTATIONS V. APPROVAL OF AGENDA AND OTHER ITEMS OF BUSINESS Duckstad added Items XIV.A.3 and XIV.A.4. MOTION: Aho moved, seconded by Case, to approve the agenda as amended. Motion carried 5-0. VI. MINUTES A. COUNCIL WORKSHOP HELD TUESDAY,AUGUST 17, 2010 MOTION: Duckstad moved, seconded by Aho, to approve the minutes of the City Council workshop held Tuesday, August 17, 2010, as published. Motion carried 4-0-1, with Young abstaining. B. CITY COUNCIL MEETING HELD TUESDAY,AUGUST 17, 2010 MOTION: Aho moved, seconded by Duckstad, to approve the minutes of the City Council meeting held Tuesday, August 17, 2010, as published. Motion carried 4- 0-1, with Young abstaining. VII. REPORTS OF ADVISORY BOARDS & COMMISSIONS VIII. CONSENT CALENDAR CITY COUNCIL MINUTES September 7,2010 Page 2 A. CLERK'S LICENSE LIST B. ADOPT RESOLUTION NO. 2010-60 APPROVING FINAL PLAT OF THE RIDGE AT RILEY CREEK 3RD ADDITION C. ADOPT RESOLUTION NO. 2010-61 APPROVING FINAL PLAT OF THE SHNEAD ADDITION D. ADOPT RESOLUTION NO. 2010-62 APPROVING COOPERATIVE CONSTRUCTION AGREEMENT WITH MNDOT FOR TH 169/I-494 PROJECT E. AWARD CONTRACT FOR RILEY CREEK BANK STABILIZATION PROJECT TO MINNESOTA NATIVE LANDSCAPES F. AWARD CONTRACT FOR INSTALLATION OF DUGOUT COVERS ON BALLFIELDS AT MILLER PARK TO PASS FENCING G. APPROVE PROFESSIONAL SERVICES AGREEMENT WITH AE2S FOR ENGINEERING SERVICES FOR UTILITIES CAPITAL IMPROVEMENT PROJECTS FOR 2010-2011 MOTION: Nelson moved, seconded by Case, to approve Items A-G on the Consent Calendar. Motion carried 5-0. IX. PUBLIC HEARINGS/MEETINGS A. CUMMINS GRILL HOUSE SEWER AND WATER C.O.A. Certificate of Appropriateness for sewer and water utilities extension for the R. Cummins Homestead. Neal said official notice of this public hearing was published in the August 26, 2010, Eden Prairie News and sent to five property owners. The John R. Cummins Homestead was designated a Heritage Preservation Site on September 16, 1997. The property was added to the National Register on October 13, 1982. It is one of two sites in Eden Prairie on the NRHP. A Certificate of Appropriateness (COA) is required to make any change in, on, or to a designated Heritage Preservation Site. Any proposed change, addition or alteration to a building, structure or site must meet the Secretary of the Interior's Standards and Guidelines for Historic Preservation Projects. The Heritage Preservation Commission and staff reviewed the Sewer and Water Extension Plan to ensure compliance with these standards. The City Council approves the COA. The Eden Prairie Historical Society is requesting approval of a COA for extension of sewer and water utilities from the existing sewer and water mainline stubs located at Pioneer Trail to a termination point on the west side of the John R. Cummins House. Trenching for the utilities will follow the existing driveway alignment to minimize disturbance to the site's lawn areas. Utilities will then be brought into the house by a qualified plumber for connection to the home's existing bathroom and kitchen. The water supply will also CITY COUNCIL MINUTES September 7,2010 Page 3 be connected to exterior hose bibs, and be made available for a future interior fire suppression system. Neal said the plan is found to meet preservation standards applicable to this application request. He said the Eden Prairie Heritage Preservation Commission held a public meeting on August 16, 2010, and reviewed the sewer and water extension plan per City Code, Section 11.05, Subd. 8.C., criteria for COA. The Commission voted in favor(4-0) and recommends that the City Council approve the application for COA No. 2010-03-004, with the following condition: Prior to starting work, the Eden Prairie Historical Society and its utility contractor consult with City staff on avoiding impacts to significant trees in the trenching alignment area. Neal said the Eden Prairie Historical Society now leases the John R. Cummins Homestead from the City and,per the lease agreement, the Historical Society is responsible for extension of new utilities to the house. As part of its core mission to provide quality programs and public access to the house, the Historical Society plans to make City approved improvements to the home that provide better functionality and address access and safety needs. Extension of City sewer and water service is the first phase of the planned improvements. Dick Proops, 9408 Club House Road, asked what kind of investment we are talking about for this project. Lotthammer said the last estimate he heard was $8,000- $12,000. Neal noted this is money from the Historical Society and is not a City cost. MOTION: Case moved, seconded by Aho, to close the public hearing; and to adopt the Findings of Fact and approve Certificate of Appropriateness #2010-03- 004 for the John R. Cummins House sewer and water extension plan. Motion carried 5-0. X. PAYMENT OF CLAIMS MOTION: Duckstad moved, seconded by Case, to approve the payment of claims as submitted. Motion was approved on a roll call vote, with Aho, Case, Duckstad, Nelson and Young voting "aye." XI. ORDINANCES AND RESOLUTIONS XII. PETITIONS, REQUESTS AND COMMUNICATIONS XIII. APPOINTMENTS XIV. REPORTS A. REPORTS OF COUNCIL MEMBERS 1. Private Mowing of Public Land—Council Member Nelson CITY COUNCIL MINUTES September 7,2010 Page 4 Nelson said during this election cycle she has been talking to people living adjacent to park property, and she would like to look into a change to our rules regarding private mowing of public land, possibly by taking it through the Parks Commission. She believes there are places where it might be appropriate to mow, and people could apply for a permit to do that. We could charge for the permit and have a larger penalty for those who mow without a permit. Case said he liked the idea of sending it back to a commission to have them study it, and there might be broader issues with it that we could encompass. He said he visited an encroachment site where the people had been given a summons because they had removed buckthorn. He thought we might consider giving out buckthorn permits. Young said he was reminded of an issue Council Member Aho and he raised a number of years back so he would support having a commission look at it. Aho noted this is a good idea and this issue also came up several times in his conversations with people. Neal said staff will organize the process. 2. Special Services District for Pond Maintenance and Treatment— Council Member Nelson Nelson said there are a number of storm water treatment and natural ponds that seem to be full of green slime this year. There are some cases where the neighbors would like to have the opportunity to do something fairly permanent to make it more attractive. She would like to see if there is some way that a neighborhood could do a special service district for a pond and pay for it on their taxes. Right now we don't have a way for that to happen, and she thought this will come up more and more as the ponds age. Aho thought it is a good idea to maintain our ponds,but it is very costly to maintain them to the level where there would be no algae growth. He thought we have to be sensitive to how it would be done both ecologically and financially. It is difficult to get everyone in the neighborhood to buy into this and have it levied on their taxes. It opens up a number of issues that are not very easy to resolve. He thought we could let our commissions look into it to see if there is some way to accomplish this. Nelson said she would like to get more control over some of the ponds and deal with it in a better way than we are now. She thought the Conservation Commission might look into this. Duckstad asked Mr. Dietz to comment on this subject. Dietz thought the Conservation Commission could look into it. He said there are three things that property owners can do to help the problem: clean up pet waste, don't CITY COUNCIL MINUTES September 7,2010 Page 5 let grass clippings go into the ponds, and leave a buffer zone for water filtration. He thought we could come up with a list of does and don'ts for property owners. He noted the special services district designation has some fairly onerous criteria. He thought we could gather that kind of information and decide what the possibilities are. He cautioned it can be done to some level,but it might raise expectations about a pond that we really can't do anything about. 3. City Manager--Council Member Duckstad Duckstad said there is an imminent need for the City Council to move forward to find another City Manager. He understood Mr. Neal is very close to being considered the City Manager of Edina and, if that occurs,he thought the City Council has a duty to move forward with dispatch to find another City Manager. He thought we should set in motion a mechanism to find a recruiter who can compile a list of possible city managers. Greg Albrecht, a resident of Eden Prairie, has experience in recruiting. He thought the Mayor could designate two Council Members to discuss this with Mr. Albrecht and start the search for qualified city managers. He asked Mr. Neal what his job status is with Edina. Neal said he was being considered for the position but he has not heard anything yet. Duckstad asked if he expects to know by the end of the night if he has been accepted. Neal said he does and will let the Council know as soon as possible. Young thought the idea makes sense, and there would be a great benefit to having a local person involved in the search. He asked if Mr. Duckstad would like the City Council to take action this evening. Duckstad said we could form a plan or procedure to go forward on this, and he thought we should do something about it immediately. Young was not sure it made sense to send two City Council Members because he thought Mr. Albrecht is known to most of the Council Members. Case said he did not have a sense of panic, and we have an incredibly competent staff at the department head level that can manage the City quite effectively. He thought this is such an important and large decision that it calls for the opposite of what Council Member Duckstad is pushing tonight. He would like to have the City Manager find out what is happening and let us know in an email tomorrow. He thought it would be appropriate to come to the next meeting or a special meeting with a list of criteria of what we are looking for in a City Manager. He said this feels like we are jumping the gun, and he thought the new City Council would be the one to choose the new City Manager. He said we have been through this process a couple of times, and he would encourage us to slow down and work through the process of what we are going to do to find the right person. Young said this issue came up at the last City Council meeting, and there is no question that this Council would give input to the recruiter before the search was initiated. He saw no reason to wait, and said he has every CITY COUNCIL MINUTES September 7,2010 Page 6 intention of fulfilling his obligations to the City until December 31. Case asked if he was suggesting we appoint a City Manager who would work with this City Council for only three meetings. Young replied if it is an obligation of this Council to take action, then we will take action. We have no idea how long the search would take, and it is our prerogative to start the process. The only matter Council Member Duckstad raised today is whether we should retain Mr. Albrecht as a recruiter. Aho said he agreed with Mayor Young that it is our responsibility to make sure we have in place a strong City Manager for Eden Prairie. A decision is imminent on Mr. Neal's position, and we do have a number of critical things coming up including the budget process. The sooner we can get somebody up to speed, the better it would be for that person, for our staff and for the City Council. He said from that perspective we need to look at our process, the criteria of the job, and our contract with Mr. Neal. We should put all the pieces in place now rather than later, whether that is going to take a special meeting or we do it now. We will need to retain the services of a recruiter to employ a good,high quality manager for the City. He said he knows Mr. Albrecht to be a very reputable individual. He has spoken to Mr. Albrecht and asked him if this is something in his area of expertise, and he said it is. Nelson thought we need to get this started,but we do have some decisions to make about the search. We usually ask for a cost proposal from people, and we have no idea what Mr. Albrecht's cost proposal would be. She was not willing to pick a person tonight without a cost proposal,but she did think we need to start discussion within the Council about the type and style of contract and the kinds of things we are looking for in a City Manager. She thought we also need to decide if we are doing a national or a state search. MOTION: Duckstad moved to adopt a resolution designating Council Member Aho to obtain a proposal from Greg Albrecht and at least two other people who are competent and to obtain at least three proposals to distribute among the Council Members. Motion died for lack of a second. Case said he accepts that it is within our judgment to get this moved along. He noted Harry Bruhl of Decision Resources has worked with the City for a long time, and he has annual surveys with the community and staff about city managers. While he was not accusing anyone of violating the open meeting law and open meeting laws are a perceptual thing, he noted Council Member Duckstad and others talked about how Mr. Albrecht was known to them from Rotary. He said that sounds like you, as Council Members, contacted Mr. Albrecht. He thought it would look really bad to move on a decision tonight to hire Mr. Albrecht. CITY COUNCIL MINUTES September 7,2010 Page 7 Young thought Council Member Case unfairly characterized tonight's discussion and made an accusation. He said Council Member Nelson raised the issue of getting other bids, and Council Member Aho agreed with that. He didn't think Council Member Duckstad's comments were out of line, and Mr. Albrecht is involved in many activities in the City. Aho said he took extreme offense at the implication that he violated the open meeting laws as he looks at those things very carefully to make sure to do nothing that violates those laws. He said he sees Greg Albrecht every week at Rotary and asked him, not in an official capacity, if his firm does that kind of work. He felt strongly that we should use an RFP process for everything we do, and he simply suggested that we start the process rolling. Neal said there are some groups and people that are prominent in Minnesota for executive searches for city manager positions. Staff is willing to make some contact with those folks, to put together some very general specifications for an RFP, and to bring those back to the Council in two weeks. Duckstad said he agreed with Mr. Neal and suggested we go forward with that. Aho said he would like to add that we should solicit proposals. 4. Zero Budget--Council Member Duckstad Duckstad said at the last meeting he urged the City Council to direct the City Manager to go forward to work and create a zero budget. It would appear there was a consensus the City Manager go ahead and prepare another budget which would result in a zero increase over this year. Neal said he understood that the City Council desires to see the impacts of a budget that is a zero levy/zero spending increase. He also understood the City Council wanted to have input from the Budget Advisory Commission (BAC) on that scenario as well as a couple of others, and that is on the agenda of the BAC to review. There is a joint session of the BAC and the City Council scheduled for mid-October to review those scenarios. Duckstad then asked if we plan to go forward and prepare at least one zero budget. Neal said that is correct. B. REPORT OF CITY MANAGER 1. Budget Advisory Commission Recruitment Process Neal said a couple of years ago we changed the terms of the members of the BAC as well as the appointment structure and timing for that commission. He said there are three members of the current BAC whose terms are expiring at the end of this year. We need to begin the process of soliciting and recruiting new members. He proposed we open the process for application on September 15 and close the process on October 15 with a CITY COUNCIL MINUTES September 7,2010 Page 8 special meeting or interview night on Tuesday, November 9. If we can make the selection on November 9, it could be acted on at the November 16 Council meeting. We could then do a month's worth of orientation if there are new members. If we were to have a special interview night or workshop on November 9, we would still have just two meetings in November. Nelson said the timeline sounds good to her, and November 9 would seem to be an appropriate date. The other Council members agreed. 2. Resolution No. 2010-63 Certifying Proposed 2011 Property Tax Levy, Accepting Proposed 2011 Budget, Setting Public Hearing Date & Consenting and Approving the HRA Tax Levy Neal said Minnesota Law and administrative rules prescribe a detailed process for public notification and participation in setting taxes and budgets of local governments. Cities must adopt a proposed net property tax levy by September 15 and certify it to the county auditor. In addition, the City Council must accept a proposed budget for the coming year. The City must announce at this Council meeting the future time and date of the regularly scheduled meetings at which the budget and levy will be discussed and public testimony taken. The Council must adopt the final tax levy and budget by December 15. Minnesota Law authorizes the HRA to levy a tax with the consent of the City Council. This resolution gives the consent needed for the HRA. He said we have typically tried to set this as close as possible to what we believe will be our budget needs are for the upcoming year. We try to set a number so that we can move it down in the next two months as the Council's desires and our understanding of our revenue become clearer. We set the final budget in December, and that can be at or lower than the amount we set tonight. He said we have the same budget proposal tonight that we reviewed at the August 17 workshop. Duckstad said this has been an unusual year and the economy remains in a very difficult condition. We continue to have people who have been laid off and people who are suffering from wage freezes. He believes the level that we have set for the preliminary budget is too high, and he would like to make an amended motion. Young said he tended to agree with Council Member Duckstad. Nelson said she wants to hear what the BAC has to say, and she didn't think this will be the final number. We need a deliberation of what services would have to go, and that is not something to do lightly and without thought. She would rather pass this and then listen to considerations and implications in order to come down to a budget that makes sense to the community. She believes the people of this community need us to take a good solid look at this, and we need to hear the advice of the BAC. Aho said this is the maximum amount of the levy, and we have hardly every used that amount as the final number. We are not tied to this as the final CITY COUNCIL MINUTES September 7,2010 Page 9 number, and he too would like to see a lower number as an end result. We have to approve a number tonight and come up with an amount. He saw no reason why we shouldn't approve this amount tonight and then work diligently to find how we can reduce the amount. Duckstad agreed that we should consider the recommendation of the BAC. He said there is a report from them recommending a zero increase budget for 2011, so we have already been given their recommendation. He saw no reason not to strongly consider the recommendation from that commission. Case agreed that people would be quite concerned to learn we were raising taxes in an arbitrary manner,but people would also be just as concerned if we follow Council Member Duckstad's proposal to lower the number tonight when we don't really know what that would mean to the community. We are just setting the maximum tonight and will study this over the next few months to find out if a zero budget could work. Young said it seemed to him if the Council is committed to a zero percent levy, it is passed as a zero percent levy tonight. That gives us two months to study the budget in a more thoughtful way. Case noted a zero percent budget is different from a zero percent levy. He was not opposed to a zero percent levy increase and would like to study that to see the impacts,but that would mean a zero percent tax increase on the tax base. He thought a zero percent budget might have devastating effects. He thought it would be irresponsible to lower the proposed amount before we study the budget over the next two months. MOTION: Duckstad moved to adopt a resolution to certify the proposed 2011 property tax levy to be the same amount as was established for 2010 ($30,512,986), to set December 7, 2010 as the meeting which will include discussion of the budget and provide for public comments, to accept the proposed 2011 budget of an amount that represented the same number that was set in the 2010 budget, and to consent and approve the HRA tax levy of $200,000. Kotchevar said for a flat tax levy the amount would be $32,009,673, which would compare to the proposed levy of$32,761,605 for this year. Motion died for lack of a second. Rosow said this is complicated and he thought it might be appropriate to put a hold on this discussion and go on to the next item so that Ms Kotchevar can put the figures in writing. That would give a clearer understanding to everybody. Young agreed and the Council moved to the next item. 3. Flyins! Cloud Fields Leases CITY COUNCIL MINUTES September 7,2010 Page 10 Neal said there was a good discussion on this item prior to the meeting tonight. We reviewed again the necessity of the project that was driving this section of the lease agreement. He said we have brought back for Council approval two revised lease agreements, one for the existing Flying Cloud fields and another for the Flying Cloud field expansion area. Rosow said there are three differences between these versions and what the Council saw before. The commencement date was changed from August 1 to September 1, the exact legal descriptions were added in, and Paragraph 6 was changed. The previous version of Paragraph 6 included a specific amount of rent per year and included the phrase "including all renewal periods." The current version removes the phrase "including all renewal periods." The MOU states the cost to Eden Prairie to lease the property shall be subject to negotiation but shall be at the same order of magnitude as the current lease payment so long as the Federal revenue diversion policy remains the same. The two leases under discussion are for the current fields and the expansion fields. The community gardens and the MOU will be dealt with separately. Duckstad said he was concerned about the two leases we are being asked to pass tonight but also there is another parcel of property that is adjoining Pioneer Trail that the MAC may intend to have developed as a commercial piece of property. He believes they want to entertain the right to develop the property, in which case because they are the owner of the land they will most likely enter into a lease with an investor. The leases we are asked to sign tonight have a provision that the MAC, in conjunction with the Federal government, can recapture the land we lease any time within a period of one year and would owe us nothing if they exercise that recapture provision. He believes we want ball fields,but he wants a fair shake from the MAC. He wants the MAC to be willing to renegotiate these leases so that we have the same opportunity of a recapture provision as they would allow a commercial enterprise. He thought that would be fair and would help tell our taxpayers we are negotiating the best extension we could. Neal said this is and has been an issue with the Flying Cloud fields,both the current ones and the expansion area, for 20 some years. It will always be an issue in the community because we don't own the land. We get the land at a very sub-market lease payment to the MAC, and that is what we will receive if the City Council approves the lease agreements. We have never represented it in any way other than there is risk associated with it. The commercial development scenario outlined by Council Member Duckstad is possible but at this time it is hypothetical, and there is no commercial development proposal floating out there. They have told us there is a desire to develop that corner as a commercial development but they have not done so at this point. The term of the agreement and the language of this agreement were spelled out by the MOU approved in 2002. That has been our chief negotiating term with the MAC in this whole process. CITY COUNCIL MINUTES September 7,2010 Page 11 Aho said he agreed with Council Member Duckstad's concerns about investing the amount of money that we are looking at into this field, given the fact that we have the opportunity to have it taken away from us within a period of one year. However, it is a risk we have been taking for a number of years on the current fields, and we have been okay with that. He didn't know that we have a lot of choice to renegotiate the MOU put in place in 2002. He thought it would be nice to have an agreement that gave us a longer lease period with a clause that MAC would reimburse us if they took it back,but the chance of being able to renegotiate in that fashion is pretty low. He said he is comfortable with the risk, considering the past history with the MAC on this subject. Duckstad said he was not willing to abandon the idea that we should make a further effort. We will make another significant investment of$1,200,000, and before we do that we owe it to the taxpayers who are being subjected to the risk to go back to negotiate with the MAC. He was also concerned that a referendum raised $1,200,000 for this ball field, and he didn't know if the public was told more than the fact that the money would be used for a ball field when that referendum was passed. He wasn't sure they were told the MAC was giving us a lease where they could take it back in one year. He was concerned we are going ahead with the leases without going to the MAC to say we want to reserve the right to renegotiate the lease to one that is just as good as what they would give to a commercial development. Nelson said she was not completely happy with our situation at Flying Cloud fields; however, we have been in the same situation for 20 years. She believes at the time of the referendum people knew we would be building fields on property that did not belong to the City. There is also a risk the other way that they won't give us the fields. Since there is risk either way, it seemed to her this agreement is the same as before and is a reasonable price to the City. She said the history of good faith is there with the community. Neal noted he was part of the communication process from 2004 and 2005 and could provide ample evidence that we were very straight forward with the voters about what our potential control of that property was going to be. It was communicated often and clearly. Rosow said he wanted to point out a couple of items for clarification of the terms. It is a three-year lease with a recapture by the MAC upon one year written notice to the City with no monetary compensation. The renewal will be based on a new determination by the MAC and the FAA that the property is not needed for exclusive aviation use. The proposed lease in many respects follows the terms of the prior lease. The terms of the MOU are being followed with respect to the language. He said his position would be that if they don't need it for exclusive aeronautical use, then the lease renews. That does not eliminate the concern regarding the one year written notice. The MAC was originally sued by Northwest Airlines about revenue diversion, and that slowed up the whole process. CITY COUNCIL MINUTES September 7,2010 Page 12 Duckstad asked if the lease states it can be renewed for a period of three years but it does not state we have the right to renegotiate. Rosow said that was correct. Duckstad said so no matter which three-year period we're in at any time the MAC can send a notice to the City saying, "Sorry, get out of there." Rosow said the MAC can give one year's notice without explanation to terminate the lease at any time, and it states "with no monetary compensation." He said we asked them if they had anything in their 20-year plan that would preclude our use our use of the property for the athletic fields and their answer was they did not. Case said we have been living under these circumstances for two decades, and we have no other alternatives for fields. He believes this is the best deal for the people of Eden Prairie, and 20 years of City Councils have consistently believed that. Neal said their direction in terms of hanger construction is south of the airport, and they have taken considerable pains to develop to the south rather than to the west. Aho said he understood the 2002 MOU also states that they basically expanded the runways to the maximum limit allowed. Rosow said he believes the longest runway is at the maximum length for this type of airport, subject to any change in State law that would extend the maximum length of runway for this type of airport. Aho said his point is that there is very little chance the MAC would have an aviation purpose for the use of this property, therefore the risk of their taking the property would be equally as low. Rosow said based on all our discussions with the MAC he believed that was a fair statement. Duckstad said he just wanted to talk to the MAC one more time to see if we can get a better deal for our taxpayers. A representative of the MAC present at the meeting said by doing a lease term of three years or less the FAA does not have to act on the MAC's ability to enter into a lease with the City. He noted there will be a point at which the MAC will be required to let the City have the property at fair market value, and fair market value is many multiples of the lease rate in the current agreement. Young said he understood Council Member Duckstad's concerns and believed they are legitimate. MOTION: Case moved, seconded by Aho, to approve lease agreements with the Metropolitan Airports Commission for Flying Cloud fields and the Flying Cloud fields' expansion area. Motion carried 5-0. 2. Resolution No. 2010-63 Certifying Proposed 2011 Property Tax Levy, Accepting Proposed 2011 Budget, Setting Public Hearing Date & Consenting and Approving the HRA Tax Levy (Continued) CITY COUNCIL MINUTES September 7,2010 Page 13 MOTION: Duckstad moved, seconded by Young, to adopt a resolution to certify the proposed 2011 property tax levy to be $32,009,673, to set December 7, 2010 as the meeting which will include discussion of the budget and provide for public comments, to accept the proposed 2011 budget of$40,414,931, and to consent and approve the HRA tax levy of $200,000. Nelson said she believes setting it at zero without any discussion of the implications is irresponsible. We have a state pension increase, and health insurance is going up. It is irresponsible to just set it at zero without having the option to raise taxes 50 cents to $1 per month for people so we don't have to risk looking at getting rid of police officers. She said she couldn't vote for this amount as it is too low and doesn't take into consideration the reality of inflation. Case said we are forgetting last year we used $976,084 of the Budget Stabilization Fund to stay even and we are actually short this year. He was guessing we will be $1-1,200,000 short. That means Council Member Duckstad's proposal would either force us to borrow again or to find $1,200,000 to cut from the budget. He found it unbelievable that we are considering doing this tonight without the facts or the numbers. Aho said this is a very important topic but he didn't like some of the things we are throwing around. The more fair way to say this is to say we will have to reduce the budget rather than saying we will have to reduce the police and fire personnel. He thought we spent too much out of our Budget Stabilization Fund in past budgets trying to keep the levy at zero. He thought spending that much out of the fund was not good. To set a proposed budget and levy at zero tonight and go ahead to try to achieve a zero budget and a zero levy without knowing all the facts is not a great idea. Neal said one measure of how the Council could go about this would be to look at how we have handled this issue in the recent past. We could look at the last couple of years where we have had a flat levy and flat budget increases. He hoped the Council would take that as a signal that we can as a group in a responsible way meet a goal of fiscal restraint in an orderly fashion. Duckstad said we have a BAC that has been working on this all year, and they have had a full budget to look at. They have recommended a zero increase budget for 2011. He respects the work they have done and didn't think they have blindly gone ahead to reach a conclusion they did not feel was correct. Case was concerned that once again we throw around the two words,budget and levy. The motion says levy but now Council Member Duckstad quoted the budget. He said he certainly supports a zero budget,but the motion is CITY COUNCIL MINUTES September 7,2010 Page 14 requesting a levy tonight that would drive a $1,200,000 debt. He asked if the BAC recommended a zero percent levy or a zero percent budget increase. Duckstad said it was a zero percent budget increase. Neal said the BAC's review of the operating budget has been quite abbreviated this year. Most of their focus has been on the capital improvement program. They did make a recommendation for a zero percent budget,but they also made a recommendation to include a 2 percent wage increase across the board. He thought it has been our intent to have some additional deliberation with the BAC when we had clearer Council direction. Young agreed with Council Member Duckstad and also thought in years past when we set the preliminary budget at a higher level there has been a lot of comments on the various budget proposals and, at the end of the day, there are several proposals to consider. Our residents don't know what we are considering because of the various proposals out there. We have relied heavily on the Budget Stabilization Fund for several years. We need to have a medium and a longer term vision of what services we deliver. There is a three month opportunity to look at different ways of funding. He thought we need to start forcing the longer term solution. Aho agreed we need to strive for a zero budget increase this year, but there are a number of factors we need to consider that may change that outcome. He would like the opportunity to have some flexibility. Our direction to staff would be to give us a zero percent budget and see what it would look like. We could see what service levels would be like under that zero percent budget. He also did not want to see the Budget Stabilization Fund go to zero. Tonight we need to give ourselves flexibility but also direct staff to look at a zero percent budget increase. Duckstad said earlier Council Member Case said there was some confusion about the terms levy and total budget and he didn't understand why there was confusion. The amount stated in the motion is the same amount as the total budget for 2010. The 2011 and 2010 budgets are identical. Case said he was just pointing out there is a difference between the levy and the budget. He said if we drive the levy down to zero we may force ourselves to go to the Budget Stabilization Fund in order to keep the budget at zero. He favored looking at a zero budget but didn't necessarily favor a zero levy increase. VOTE ON THE MOTION: Motion failed 2-3-0, with Aho, Case and Nelson opposed. MOTION: Case moved, seconded by Nelson, to adopt Resolution No. 2010-63 to certify the proposed 2011 property tax levy to be $32,761,605, to set December 7, 2010 as the meeting which will include discussion of the CITY COUNCIL MINUTES September 7,2010 Page 15 budget and provide for public comments, to accept the proposed 2011 budget of$41,465,943, and to consent and approve the HRA tax levy of $200,000. Motion carried 3-2-0, with Duckstad and Young opposed. C. REPORT OF THE COMMUNITY DEVELOPMENT DIRECTOR 1. Lease of City Owned Property Located at 8098 Glen Lane Jeremiah said the City acquired the old Kinder Care property earlier this year for Singletree Lane improvements. We anticipated selling the property but there was a lot more interest in leasing it. Tonight's proposal from Ace Daycare provides a $14 per square feet rental for five years to be renewed after five years. The lease would be with residents of Eden Prairie who are currently operating a day care out of their home and who would seek a license for this larger facility. This was a competitive lease process, and this lease proposal was higher by $70,000 over the five years. Aho noted the proposed lessee has some experience in the field of daycare and is currently running a home daycare. He asked how comfortable Ms Jeremiah was that they will be an on-going concern in the future and that they will be able to obtain licensure. Jeremiah said they looked at the financial and business background of the applicants, and this particular applicant has a degree in business and has operated other businesses before. Whether they can obtain the license is a question we worked on quite a bit. That is the reason they asked for the concession of four months free rent. We have asked and received a down payment for two months' rent. If they obtain their license, half the down payment would go towards the fifth month rent. Aho noted the concession is they will get four months of lease free of charge if everything goes through properly. Rosow said during those four months until January 1, they have the opportunity to obtain the licensure and if they don't obtain it they are free to cancel the lease. The lease is also cancellable by the City on one year's notice in the event the City needs the property for commercial development. Aho asked if we owe the lessee compensation for improvements on the property. Rosow said we do not. Duckstad asked how long the property was on the market. Jeremiah said it was on the market about four months before staff came back to tell the Council there was limited interest in purchasing it. Duckstad asked if she thought we did the best we could under the circumstances. Jeremiah said she believes this is a very good proposal in the current real estate market. MOTION: Case moved, seconded by Nelson, to approve a new lease between the City of Eden Prairie and Ace Daycare for a child daycare center at the City owned property located at 8098 Glen Lane. Motion carried 5-0. CITY COUNCIL MINUTES September 7,2010 Page 16 D. REPORT OF PARKS AND RECREATION DIRECTOR E. REPORT OF PUBLIC WORKS DIRECTOR F. REPORT OF POLICE CHIEF G. REPORT OF FIRE CHIEF H. REPORT OF CITY ATTORNEY XV. OTHER BUSINESS XVI. ADJOURNMENT MOTION: Duckstad moved, seconded by Case, to adjourn the meeting. Motion carried 5-0. Mayor Young adjourned the meeting at 9:02 PM.